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1.
2.
LIQUIDITY RATIOS
1.a.
CURRENT RATIO
Current assets
--------------------Current liabilities
1.b.
QUICK RATIO
1.c.
CASH RATIO
EQUITY RATIO
Shareholders Funds**
-----------------------------------------------------------------Total capital employed (own funds + borrowed funds)
**Shareholders Funds =
Equity share capital
+Preference share capital
+Reserves
-Fictitious assets
-Accumulated losses
2.b.
DEBT RATIO
2.c.
DEBT EQUITY
RATIO
Total liabilities
-------------------------Shareholders Funds
OR
Alternative formula
Long term debt
------------------------Shareholders Funds
2.d.
CAPITAL GEARING
RATIO
3.
4.
DEBT EQUITY
RATIO
As above
2.
CAPITAL GEARING
RATIO
As above
3.
Total liabilities
------------------Total assets
4.
Proprietory ratio
5.
Shareholders funds
------------------------Total assets
Fixed assets
--------------------Long term funds
COVERAGE RATIOS
4.a.
DEBT COVERAGE
RATIO
4.b.
INTEREST
COVERAGE RATIO
4.c.
5.
PREFERENCE
DIVIDEND
COVERAGE RATIO
5.a.
CAPITAL
TURNOVER RATIO
Sales
--------------------------------------------------------------Capital employed (own funds + long term borrowed
funds)
5.b.
FIXED ASSETS
TURNOVER RATIO
Sales
-------------------------------Average Fixed assets **
**Average F. A. = Opening F.A. + Closing F.A.
-----------------------------------2
5.c.
TOTAL ASSETS
TURNOVER RATIO
Sales
-------------------------------Average Total assets **
**Average T.A. = Opening T.A. + Closing T.A.
-----------------------------------2
5.d.
WORKING CAPITAL
TURNOVER RATIO
Sales
-------------------------------Average Working capital **
**Average W.C. = Opening W.C. + Closing W.C.
-------------------------------------2
Average inventory**
OR
Cost of goods sold
----------------------Average inventory**
(Better option)
DEBTORS
TURNOVER RATIO
Sales
-----------------------Average debtors**
OR
Credit sales
----------------------Average debtors**
(Better option)
Average debtors
------------------------------Average daily credit sales**
** Avg. Daily credit sales = Total sales in a year
-----------------------365
5.d.
iii.
CREDITORS
TURNOVER RATIO
Purchases
-----------------------Average creditors**
OR
Credit purchases
----------------------Average creditors**
(Better option)
Average creditors
------------------------------------Average daily credit purchases**
4
6.
PROFITABILITY RATIOS
A. FROM OWNERS POINT OF VIEW
6.A.a. RETURN ON
Profit after taxes
EQUITY (ROE)
--------------------Net worth **
** Net worth = Average shareholders equity
(including reserves)
RETURN ON
EQUITY (using
DuPont model)
6.A.c.
DIVIDENDS PER
SHARE
6.A.e.
DIVIDEND PAYOUT
RATIO
6.B.b. RETURN ON
ASSETS (ROA)
NPAT
---------------------------Average Total Assets
OR
NPAT
---------------------------Average Fixed Assets
OR
NPAT
-----------------------------Average Tangible Assets
C. BASED ON SALES
6.C.a. GROSS PROFIT (GP)
RATIO
Gross profit
---------------- * 100
Sales
Contribution
----------------- * 100
Sales
6.C.c.
Operating profit
-------------------- * 100
Sales
OPERATING
PROFIT RATIO
Net profit
---------------- * 100
Sales
MARKET VALUE /
BOOK VALUE PER
SHARE